Economic Report: New Home Sales

Sales of new homes in the US declined to their lowest levels on record, after a lackluster January in which sales fell by a stomach-wrenching 10.2%. Sales fell to a seasonally adjusted annual rate of 309,000, the lowest ever since the series began in 1963. The report was below expectations, as economists were predicting a number closer to 320,000. In all of 2008, 483,000 homes were sold, down from 776,000 in 2007 and 1.05 million in 2006.

The inventory of unsold homes did fall, though, which is good news for a market that needs to stabilize. Inventories fell by 3.1% to 342,000, the 13th consecutive monthly decline. But because the sales pace has been so weak, the monthly supply of new homes has stayed high. At the January sales pace, the inventory represented 13.3 months’ supply of homes, a record high. That number should be closer the historical average of 6 months.

Regionally, sales plunged 28% in the West, 6.5% in the South, and 5.6% in the Midwest. Sales rose 12.5% in the Northeast.

Prices didn’t fare any better:

Builders cut their median sales prices by a record 9.9% in January compared with December in a bid to move unsold homes. Median sales prices are down 13.5% in the past year, the largest year-over-year decline in 38 years. The average sales price has fallen a record 17.6% in the past year. – MarketWatch